As Texas deep freeze subsides, some households now face electricity bills as high as $10,000
“The last thing an awful lot of people need right now is a higher electric bill — and that’s unfortunately something a lot of people will get stuck with."
Feb. 19, 2021 By Leticia Miranda nbcnews.com
As the Texas power grid collapsed under a historic winter storm, Jose Del Rio of Haltom City, in the Dallas-Fort Worth area, saw the electricity bill on a vacant two-bedroom home he is trying to sell slowly creep up over the past two weeks. Typically, the bill is around $125 to $150 a month, he said. But his account has already been charged about $630 this month — and he still owes another $2,600.
“If worse comes to worst, I have the ability to put it on a credit card or figure something out," Del Rio said. ”There is no one living in that house. All the lights are off. But I have the air at 60 because I don’t want the pipes to freeze.”
When he contacted Griddy, his electric company, they advised him to switch providers, Del Rio said.
Griddy's prices are controlled by the market, and are therefore vulnerable to sudden swings in demand. With the extreme weather, energy usage has soared, pushing up wholesale power prices to more than $9,000 per megawatt hour — compared to the seasonal average of $50 per megawatt hour.
In the face of the soaring costs, Griddy has been directing consumers to consider temporarily switching electricity providers to save on their bills.
Griddy did not respond to NBC News’ request for comment.
The Electric Reliability Council of Texas, or ERCOT, which manages power for about 90 percent of the state's electric load, was unprepared for the frigid conditions of the past two weeks: The primary electric grid was hit with off-the-charts demand for power as Texans tried to heat their homes — demand that outpaced utility officials' highest estimates for an extreme peak load.
"I'm taking responsibility for the current status of ERCOT," Gov. Greg Abbott told reporters on Thursday.
Customers outside the ERCOT service area have also been hit with sticker shock. Veronica Garcia, a Reliant Energy customer in Mansfield, Texas, told NBC News her bill is projected to be twice as much as she typically pays a month for electricity. She last paid $63 on Feb. 11 to power her one-bedroom apartment, but her bill is projected to be between $114 and $133 in March, according to documents reviewed by NBC News.
Her home didn’t have power for about three hours early Tuesday morning. But since the storm hit, she hasn’t been using much power. She left her apartment Tuesday to stay with her mother-in-law because of the cold.
“Hopefully if they’re decent, they won’t charge people for this, because we had no control over the situation,” said Garcia, who is an administrative associate at UT Southwestern Medical Center. “Hopefully I can beat the charges and they do the right thing.”
Reliant Energy spokesperson Megan Talley told NBC News that it is offering flexible bill payment options to support customers impacted by the storm. It said customers should contact the company directly “so we can work with them through this difficult time.”
Oncor Electric Delivery, which distributes wholesale electricity for Reliant Energy, did not respond to NBC News’ request for comment.
Texas laws protect consumers from companies exploiting natural disasters for profit, but it is unclear if those laws can be extended to protect electric customers slapped with large bills, said Keegan Warren-Clem, a managing attorney at the nonprofit Texas Legal Services Center.
Federal programs such as the low-income housing energy assistance program might protect energy customers who qualify from the high charges, she said. If they don’t qualify for the federal program, a customer can look into bill assistance programs through charities or churches, she said.
“There are limited options available in the absence of action at the state level to provide consistent relief,” Warren-Clem said.
Customers may be able to work with their credit card issuers on a plan to cover the bill over time, said Matt Schulz, chief industry analyst with LendingTree. He said credit card companies have become more flexible with borrowers over the course of the pandemic.
“The last thing an awful lot of people need right now is a higher electric bill — and that’s unfortunately something a lot of people will get stuck with,” Schulz said.
Royce Pierce and his wife, Danielle, who live in Willow Park, west of Dallas, have been watching their electricity bill tick up by nearly $10,000 in the last few days for their three-bedroom home. While the family told NBC News they consider themselves lucky because they’ve had power, the financial burden has come with additional challenges.
Since the family is on a variable rate plan with Griddy, the company automatically debits the bill as they use electricity. Danielle said she closed the debit card connected to their electricity bill because Griddy wiped it out. The family has been using separate accounts and credit cards to pay for necessities as the storm goes on.
“We are hoping there will be relief,” Royce said. “This is something maybe we can skate by and tackle as time goes on but how many people can’t? A lot.”
Although Griddy has become the whipping boy of Texas' deregulated power market, it is important to know that the company only has 29,000 customers. I expect that by the end of next week, they may have zero. I also suspect there may be a handful of other providers with consumer contracts pegged to the wholesale price of electricity on the ERCOT system. Tough choice to cancel Griddy with no option to be picked up by another provider until sometime next week. For many, the warming temps will allow them the option to go without electric service until they can sign on with other retail providers.
Griddy members pay a $9.99 monthly fee and then pay the cost of spot power traded on Texas’s power grid based on the time of day they use it. Earlier this month, that meant customers were saving money — and at times even getting paid — to use electricity at night. But in recent days, the cost of their power has soared from about 5 to 6 cents a kilowatt-hour to $9.
They have around 29,000 customers.
Electric bill using 1000kh @ $.06 + $9.99 = $70
Electric bill using 1000kh @$9 + $9.99 = $909.99
An example of free market capitalism at its best.
Found on reddit:
Since I moved to Texas I am blown away bu the number of plans that penalize you if you use LESS than a particular threshold of electricity. As an example (made up but estimated numbers): 12.5c per KWh At 1000 KWh, an $80 credit is applied to your bill At 1500 KWh, a surcharge of 5c/KWh is added.
This means that at 999 KWh, your bill is $124.88. at 1000 KWh, your bill is $45.00. at 1400 KWh, your bill is $95.00 . at 1600 KWh, your bill is $112.50. at 2000 KWh, your bill is $132.50
Based on this, you are almost forced to use at least 1000 KWh.
Personally, I have always gone with plans that are straight up (flat 8 cents per KWh) so that saving energy means saving money, but the plans here definitely encourage wasteful energy use in some cases.
The Texas retail electric system looks more bizarre each time we learn a new facet. Thanks. I think this will resonate for some time and require substantive action by Texas politicians.